Wall Street, Marshmallows and Your Money-What’s a Spender to Do?

I recently saw the movie The Wolf of Wall Street. It is based on a true story of a corrupt Wall Street broker. In it, Matthew McConaughey’s character, Mark Hanna, as a mentor to the main character, tells his protégée the secret to making money as a broker. The money is made not by the investor who has paper winnings and losses, but by the broker who is paid in cash for transactions made. The broker makes the cash while the investor is the one chasing the gains moving from investment to investment.

He or she who has the cash wins, right? Short term perhaps but long term does it still play out?

Most people do what most other people do with their money. Most people spend it. Whether money is received as a paycheck or from a distribution, money received is most likely money spent. Why is that?

It appears that people are wired to readily consume. Whether it’s a need to fulfill an instant gratification need, whether it’s to fulfill a basic need, or to make up for something missing in our lives, consumption is made to be as easy as possible. “On Demand” products and services are hugely popular. It fulfills the get it and need it now impulse.

But what are the consequences? According to the Stanford Marshmallow Experiment first conducted in 1970 and followed up on several times to follow the outcomes and consequences of instant versus delayed gratification. The study found that those who delayed gratification were found to be “more competent” years later.

It is the unusual individual who jumps the fence of the instant gratification pattern and does something more with their money such as save, invest, or donate. These behaviors, it seems, need to be taught.

When you deposit your next pay check or distribution check take the time to ask yourself: “What do I really want my money to do for me, not just now, but in 5 years? Other than consuming, what do I want to save for? How do I want it to grow? What organization do I want to support?” Begin the conversation with yourself. If you want to keep more money, then be disciplined by committing to and consistently adding money to these other money areas of your life.